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Post-death Sequestration

Family Law – Post-death Sequestration and Survivorship Destinations

Family Law specialists, Oracle Law recently successfully acted for the Trustee in Sequestration in the case of Chalmers v Machin [2017] SC GLA 29.

Paul Fairbridge of Oracle Law, commented:

“Chalmers involved a question that has long gone unanswered in Scots law: what are the trustees rights to property transferred under a survivorship destination where the estate has been sequestrated after the debtor’s death?

The facts of Machin are straightforward and common. At the date of death his widow acquired a half interest the debtor’s flat under the survivorship destination. Roughly, two years after the debtor died, his estate was sequestrated.

In normal course, a survivorship destination provides that ownership in a property passes automatically to the survivor’s spouse or partner on death. This was confirmed in the case of Fleming’s Trustee v Fleming 2000 SC 206 (Fleming).

In Fleming, the deceased had been sequestrated prior to his death and his Trustee challenged the transfer of the property to his widow.  The court held that the transfer happened automatically in terms of the survivorship destination. But the sting in the tail was that the court held that the widow was liable for the deceased’s debts up to the value of the transferred property at the date of death.

What has been unclear (and perhaps misunderstood) is whether this principle applied where the trustee in sequestration was appointed after the transfer.  Sheriff Reid’s decision clarifies the matter and confirms that although the property transfers at the date of death, it does so with the provision that the recipient is liable for the debts of the deceased to the value of the property transferred under the survivorship destination. ”

For further advice, contact Paul Fairbridge, Oracle Law

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